International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056
Volume: 13 Issue: 05 | May 2026 www.irjet.net p-ISSN: 2395-0072
A Systematic Review of Investor Perception toward Initial Public Offerings (IPOS) In India
Janki Mehta Student, Gyanmanjari Innovative University, Bhavnagar, Gujarat, India
Abstract - InitialPublicOfferings(IPOs)playavitalrole in capital markets by enabling companies to raise funds while offering investors opportunities to participate in early-stagegrowth.Inrecentyears,theIndianIPOmarket haswitnessedsignificantexpansionduetoincreasedretail participation and advancements in digital investment platforms. This study presents a systematic review of literature from 2010 to 2025 to analyze investor perception toward IPOs. The findings indicate that investor decisions are influenced by financial performance, market sentiment, behavioral biases, and regulatory frameworks [1][5]. While strong subscription levels and grey market premiums often attract investors, they may also lead to speculative behavior [3][8]. The study highlights key challenges such as information asymmetry and irrational decision-making and provides directionsforfutureresearch.
Key Words: IPO,InvestorPerception,MarketSentiment, BehaviouralFinance,SEBI
1. INTRODUCTION
Initial Public Offerings (IPOs) represent a major milestone in a company’s lifecycle, allowing firms to raise funds from the public. For investors, IPOs provide anopportunitytoinvestincompaniesduringtheirearly growth stage. The Indian IPO market has grown significantly in the past decade due to regulatory improvements and digital advancements such as UPIbasedapplications[10].
Traditionally, investment decisions were considered rational and based on financial fundamentals. However, recent studies show that investor perception is influenced by behavioral factors, market sentiment, and externalindicators such as subscription levels and grey markettrends[5][8].
The increasing number of IPO listings in India reflects the growing confidence of companies and investors in the capital market. Strong listing gains and oversubscription trends have attracted significant attentionfromretailinvestorsinrecentyears.However,
investor decisions are not always based on financial analysis alone, as market sentiment and external influences also play an important role in shaping investmentbehavior.
In addition, the rapid growth of digital investment platforms and increased financial literacy among retail investorshavefurtherboostedparticipationinIPOs.The easeofonlineapplicationshassimplifiedtheinvestment processandattractednewinvestors.
Moreover, the increasing popularity of IPOs among younginvestorshaschangedthedynamicsoftheIndian primary market. Investors are now more actively participating in IPOs due to easy access to financial information, online investment platforms, and growing awareness about wealth creation opportunities. This increasing participation has also intensified the importance of understanding investor perception and decision-makingbehaviorinIPOinvestments.
Table 1 — IPOGrowthTrendInIndia(2020-2024) Year NumberofIPOs 2020 15
Source: NSE and SEBI Reports
2. METHODOLOGY
This study adopts a systematic literature review approach to analyze existing research on IPO investor perception.
International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056
Volume: 13 Issue: 05 | May 2026 www.irjet.net p-ISSN: 2395-0072
2.1 Data Sources and Search Strategy
Relevant studies were collected from academic platforms such as Google Scholar, ResearchGate, and peer-reviewed journals using keywords like “IPO investor perception,” “IPO underpricing,” and “market sentiment”.
2.2 Selection Process
The selection process included identification, screening, and evaluation of relevant studies based on research objectives.
2.3 Inclusion and Exclusion Criteria
Studies between 2010–2025 focusing on IPOs and investor behavior were included, while irrelevant and non-academicsourceswereexcluded.
2.4 Limitations of Study
This study is limited to secondary data and may not capture real-time investor behavior. The findings dependonthequalityofselectedliterature.
3. LITERATURE REVIEW
Bharathi (2024) analyzed investor perception in the IndianIPOmarketandfoundthatfinancialperformance significantlyinfluencesinvestmentdecisions[1].
Neupane (2012) studied retail investor participation andconcludedthatinvestorbehaviorisofteninfluenced bymarkettrendsratherthanfundamentals[2].
Krishnamurti et al. (2011) highlighted the importance of greymarketpremiuminpredictingIPOperformance[3].
Acharya (2023) reviewed IPO underpricing trends and identified investor sentiment and information asymmetry askeydeterminants[4].
Yadav (2024) focused on behavioral biases and found that herding and overconfidence significantly impact investordecisions[5].
Sonu (2022) emphasized the role of regulatory frameworksinimprovinginvestorconfidence[6]. Nafid (2014) explained the impact of information asymmetryonIPOpricing[7].
Shetty (2023) analyzed market sentiment and
subscriptiontrendsintheIndianIPOmarket[8].
Das(2021)concludedthatmarketconditionsanddemand significantlyinfluenceIPOsuccess[9].
Additional studies highlight the role of investor awareness, financial literacy, and institutional participationinshapingIPOoutcomes[11][12][13].
Research on SME IPOs and emerging markets indicates that investor perception varies based on risk tolerance andmarketconditions[14][15].
Studies also emphasize the growing importance of market sentiment and investor psychology in IPO investmentdecisions[16].
4. FACTORS INFLUENCING INVESTOR PERCEPTION
Table 2 -Factors Influencing Investor Perception
Source: Compiled from Reviewed Literature
The above table indicates that financial factors and market sentiment have the greatest influence on investor perception toward IPOs. Behavioral and regulatory factors alsoplayan important role in shaping investment decisionsandinvestorconfidenceintheprimarymarket.
4.1 Financial Factors
Financial performance, valuation, and company fundamentals play a major role in investor decisionmaking [1][7]. Company reputation and management qualityalsoinfluencetrust.
4.2 Market Sentiment
Market trends, subscription levels, and grey market premium influence investor interest [3][8]. Media coverageandexpertopinionsalsoaffectsentiment.
International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056
Volume: 13 Issue: 05 | May 2026 www.irjet.net p-ISSN: 2395-0072
4.3 Behavioral Factors
Behavioral biases such as herding, overconfidence, and fear of missing out (FOMO) affect decision-making [5][11].
4.4 Regulatory Factors
Regulatory policiesimprovetransparency andinvestor confidence[6][10][17].
5. ROLE OF DIGITAL AND FINTECH PLATFORMS
Digital platforms have transformed IPO investment. Online applications and UPI systems have simplified the process. Social media and influencers influence investor decisions but may lead to herd behavior and speculative investments. Reports indicate increasing retail participation due to technological advancements [17][18].
retail participation in future IPOs. However, excessive underpricing may also create speculative investment behaviorandshort-termmarketvolatility.
Several studies suggest that information asymmetry between companies and investors is one of the major reasons behind IPO underpricing. Investors with limited financial knowledge may rely heavily on grey market premiums,subscriptiontrends,andmediaopinionswhile making investment decisions. In some cases, IPOs that perform strongly during listing may fail to deliver sustainable long-term returns due to weak financial fundamentalsorchangingmarketconditions.
Table 4 - Average Ipo Underpricing Trend
Year AverageUnderpricing
2020 12%
Source: NSE Investor Participation Reports
The above table shows that mobile trading applications are the most preferred platform among IPO investors due totheir convenienceandeasyaccessibility. Theincreasing useofUPI applicationsalso reflectsthegrowingimpact of digitalizationandfintechadvancementsintheIndianIPO market.
6. IPO PERFORMANCE AND UNDERPRICING
IPO Underpricing is influenced by investor sentiment andinformationasymmetry[4][7].Whileitprovidesshortterm gains, long-term performance varies significantly, and not all IPOs guarantee sustained returns [19]. IPO underpricing is commonly observed in emerging markets where companies intentionally price shares lower to attract investors and ensure successful subscriptions. High investor demand during the listing period often results in significant listing gains, encouraging more
Source: Secondary Financial Market Reports
TheabovetableindicatesfluctuationsinIPOunderpricing trends over different years. The increase in underpricing during recent years reflects higher investor demand, market optimism, and growing retail participation in the IPOmarket.
7. DISCUSSION AND CHALLENGES
7.1 Information Asymmetry
Information asymmetry refers to a situation where investors do not have complete or equal information aboutacompany before investing in its IPO. Many retail investors find it difficult to interpret financial disclosures and rely on limited indicators such as subscription data or market trends. This may lead to incorrectinvestmentdecisions[7][4].
7.3 Behavioral Biases
Investor decisions are influenced by psychological factors such as herd behavior, overconfidence, and fear of missing out (FOMO). These biases often result in irrationalinvestmentbehavior[5][11].
Table 3 - DigitalPlatformUsageAmongIpoInvesrors
International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056
Volume: 13 Issue: 05 | May 2026 www.irjet.net p-ISSN: 2395-0072
7.4 Market Volatility
IPO performance is highly dependent on market conditions. Bullish markets attract higher participation, while uncertain markets reduce investor confidence [8][9].
7.5 Investor Awareness
Limited financial literacy among retail investors leads to poor evaluation of IPOs. Improving awareness can enhanceinvestmentdecisions[12].
8. FUTURE SCOPE
Future research can explore the impact of fintech platforms, digital investment applications, and artificial intelligence on IPO investment behavior. The growing influence of social media, financial influencers, and online investment communities on retail investor perceptioncanalsobeexaminedingreaterdetail.
Further studies may focus on comparative analysis between SME IPOs and mainboard IPOs to understand differences in investor behavior, risk perception, and investment outcomes. Researchers can also analyze the role of demographic factors such as age, income, education, and investment experience in shaping IPO investmentdecisions.
In addition, future research can investigate the longterm performance of IPOs and the effectiveness of regulatory reforms introduced by SEBI in improving market transparency and investor confidence. Comparativestudiesacrossdifferentinvestorgroupsand emergingmarketsmay providedeeper insights intoIPO participationtrendsandbehavioralpatterns.
9. CONCLUSION
Investor perception toward IPOs is influenced by financial, behavioral, and market-related factors. While IPOs offer attractive opportunities, many investors rely onshort-term trends rather than fundamental analysis. Improving financial literacy and regulatory transparency can enhance market efficiency and investmentoutcomes[20].
10. SUGGESTIONS AND RECOMMENDATIONS
Investors should conduct proper financial analysis before investing in IPOs rather than relying solely on market sentiment or grey market premium. Regulatory
authorities should continue improving transparency and investor education programs to protect retail investors. Companies launching IPOs should provide clear and accessible financial disclosures to reduce information asymmetry and improve investor confidence. In addition, digital investment platforms should focus on spreading accurate financial information and minimizing misleading investmenttrendsonsocialmedia
REFERENCES
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International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056
Volume: 13 Issue: 05 | May 2026 www.irjet.net p-ISSN: 2395-0072
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